Stocks Snap Two-day Rally: Bond Yields Increase

US stocks fell for the first time in three days and Treasury yields climbed amid expectations President-elect Joe Biden plans Covid-19 relief of as much as $2 trillion. The S&P 500 fell by 0.38% to 3,795.54 while Dow Jones was down 68.95 points (0.22%) to 30,991.52.

Biden Seeks US$1.9 Trillion for Relief in First Economic Plan

President-elect Joe Biden will ask Congress for US$1.9 trillion to fund immediate relief for the pandemic-wracked US economy, a package that risks swift Republican opposition over big-ticket spending on Democratic priorities including aid to state and local governments. The proposal will be followed in coming weeks by a second, broader jobs and economic recovery plan that will include money for longer-term development goals such as infrastructure and climate change, a senior incoming Biden administration officials told reporters.

Powell Bats Down Bond-taper Talk, Warning Against An Early Exit

Federal Reserve Chair Jerome Powell sought to stamp out talk of a premature reduction in the central bank’s massive bond-buying campaign, saying “now is not the time” to hold that discussion. “We know we need to be very careful in communicating about asset purchases,” he said. Now is not the time to be talking about exit. He thinks that is another lesson of the global financial crisis, is be careful not to exit too early.

UK Explores Reform of Workers’ Rights That Would Break From EU

The UK government is exploring reforms to workers’ rights that would break from European Union rules, potentially opening Britain up to retaliatory measures from the bloc. Officials have drawn up proposals that would scrap the 48-hour limit on the length of the working week, according to a person familiar with the matter, who said the plans are preliminary and that ministers have made no decisions yet.

ECB Unanimous on Stimulus Need Last Month But Split on Extent

Members of the European Central Bank’s Governing Council differed over how much additional monetary stimulus was needed at last month’s meeting, even as they accepted the need for action. The council agreed more aid was needed to preserve favorable financing conditions in view of the economic fallout from the resurgence of the pandemic, the downward revision to the projected inflation path, and the resulting risks of an unanchoring of inflation expectations.

German Economy Stalls, Probably Evading Double-dip Recession

The German economy stagnated at the end of last year, probably avoiding a doubledip recession that is engulfing the euro area. The statistics office predicted that the country’s renewed pandemic lockdown won’t have the same severe impact as restrictions earlier in 2020. It estimates output remained flat in the fourth quarter, capping a year that saw an economic contraction of 5%.

Philippine Central Bank Ready to Support More Fiscal Spending

Philippine central bank ready to support more fiscal spending The Philippine central bank is ready to help further support fiscal spending, its governor said, as the government can unleash targeted measures to help the economy through the pandemic. “Monetary policy isn’t the only the game in town, there’s a role for fiscal policy,” Benjamin Diokno said.

Oil Climbs With US Aid Hopes Brightening Consumption Outlook

Oil rose to a new 10-month high in New York on expectations that a potential US$2 trillion economic relief packaged could get Americans consuming more fuel. Brent crude for March settlement gain US$0.36 to US$56.42 per barrel.

Source: Affin Hwang Research - 15 Jan 2021